Lobbying

Lobbying is the act of influencing decisions made by the government. Nationally, lobbyists may try to influence the Senate or House of Representatives. On the state level, they can influence the State Legislature and on the municipal level, city council members or city commissioners. Federal laws allow non-profits to lobby as long as the organization does not devote more than an “insubstantial” section of its overall activities to lobbying. This can be measured by either a more subjective “substantiality test” varying for each case or an “expenditure test” by filing a form with the IRS, which is generally recommended for most non-profits.

The IRS has not specified what an insubstantial amount of lobbying is, although many tax practitioners believe that less than five percent of the non-profit’s overall activities is insubstantial. The second test is based only on the amount of money spent on lobbying, allowing a non-profit to spend up to 20 percent of its annual expenditures. Total lobbying may not be more than $1 million.

There are two forms of lobbying for non-profits filing an expenditure test, direct lobbying and grassroots lobbying. Direct lobbying is any effort to affect specific legislation through communication with a legislator, their employee, or another government official. Grassroots lobbying includes any effort to affect public opinion on a specific piece of legislation by encouraging someone to take action on the legislation. This can be done by providing legislator contact information or giving out petitions. However, a non-profit is not allowed to take part in partisan political activities.

Besides these IRS guidelines on lobbying, non-profits must also follow state and federal lobby disclosure laws, which require organizations that pay an employee to influence legislation to file reports on their lobbying activities. Also, the federal Lobby Disclosure Act (LDA) requires organizations to disclose their time and money spent lobbying the federal government. This allows the public to see which groups are lobbying.11

Under Illinois state law, those who are looking to influence administrative action or hire others to do so have to register as lobbyists. The fee for non-profits is $150 a year, compared to $350 for for-profit organizations. Non-profits must register information, including information on who will be lobbying, a description of the action being lobbied for or against, and a list of all of the executive and legislative branch agencies the organization expects to lobby. To register, see this PDF.12 The Illinois Lobbyist Registration Act also requires that all registered lobbyists file expenditure reports. For instructions on how to file the report, see this PDF. The Lobbyist Registration Act will go into action in January, 2010, requiring even non-profits to pay $5,000 to register as lobbyists.